Reassurance for the regulatory critics

MPs will need a lot of convincing that the Financial Services Authority's words about promoting greater financial literacy are being translated into some meaningful actions. The first step for the FSA seems to be to convince some members of parliament that not all of the new rules surrounding the statutory regulation of general insurance are actually setting back the cause, making it harder for people to buy insurance and making the problems of underinsurance and the declining savings ratio worse.

David Strachan, FSA director of retail firms, talked a lot about working with the industry to deliver the FSA's National Strategy for Financial Capability. What might surprise the critics of statutory regulation is how much of an industry there is for the FSA to talk to.

The figures produced for the All Party Group show that the worse fears about the numbers of intermediaries who would run away from statutory regulation or just fail to meet the deadlines and requirements have proved unfounded.

By the second week of February, the FSA had directly authorised 18 697 firms, of which 13 690 were new authorisations. This latter figure can be broken down further with 10 228 authorised for general insurance only and 3462 having applied to be regulated for mortgages and general insurance. The balance is made up of 5007 firms that have been given what the FSA calls a variation of permission. These are mainly previously authorised independent financial adviser firms that also sell general insurance, especially medical insurance.

On top of this, there are 25 423 appointed representatives at firms with a general insurance permission.

Fears that thousands of firms might end up in regulatory limbo have also proved wide of the mark as only 941 firms had to be granted interim authorisation on 14 January. Four weeks later, this had been slashed to 388 firms and it is clearly a priority for the FSA to reduce that number very quickly.

Across the political spectrum, there was a mixture of sympathy for the FSA and concern about the impact of statutory regulation, leaving one with the feeling that the FSA still has a lot to prove to the very people who passed the legislation that brought them into existence.